Two months ago we posted an article detailing how ObamaCare will affect Medicare recipients. That article can be found by clicking here. In this article we are going to take just a minute to look at how the law affects non-Medicare folks. Since this group of people are the target of the bill, the effects are numerous. Therefore, we are going to briefly summarize the high points, and spend a minute talking about what your options are.
Right off the bat this legislation makes a distinction between people covered under group coverage and those not. If you are covered under group coverage, and your employer is choosing to continue coverage under ObamaCare, then you really don’t have anything to worry about. You can keep your group coverage and life goes right along.
Of the group of people who do not have employer coverage, the law divides the population between people with individual insurance and those with no insurance. If you have existing individual insurance, there is a small chance (~10%) that your plan may meet grandfathering criteria in which case nothing would change for you either.* However, for most people who are currently purchasing insurance, your plan will be discontinued on January 1st, 2014. Now before your heart jumps a few beats, let us be clear that just because your plan is being discontinued on January 1st, 2014 , does not mean that you lose your coverage on that date. Your coverage will remain inforce until your annual policy anniversary date (the date your policy renews each year). At that point it will terminate and you will lose your coverage. Thus, you can either choose to keep your current plan until your renewal date and look at options then, or you can take advantage of the Open Enrollment Period (Oct 1, 2013 – Mar 31, 2014) to change your coverage before your renewal date.
Now we come to the uninsured. The bottom line is that everyone, with a few exceptions, will be required to purchase health insurance. And so here come all the questions. How much is the coverage? What if I can’t afford it? What happens if I don’t purchase insurance? etc. It is at this point that this article can become a novel if we’re not careful. For the sake of brevity, therefore, let us just say the following. If you can’t afford to purchase insurance, the government will help you pay your premium. If you don’t purchase insurance, you will pay an extra tax.
So whether you have insurance, or whether you don’t, what are your options? If you’re currently insured by a grandfathered plan, you can stay put and be fine. If you’re currently insured by a non-grandfathered plan, you can move to another plan during Open Enrollment, move to another plan at your policy renewal date, or drop your coverage on your annual renewal date and pay the annual tax. If you’re currently uninsured you can do nothing and pay the annual tax (provided you are not one of the few exceptions), or purchase insurance coverage.
Before concluding, there is probably one major question still remaining, “What about these health insurance exchanges I keep hearing about?” The exchanges are a vehicle by which to purchase insurance. You do not have to use the exchange, but it is an option.
We know that while this has answered some of your questions, it has no doubt given birth to many more. That is fine; that’s why we are here. For answers to your specific questions about the annual tax, government subsidies, the exchange, and coverage options, please call or email us anytime. If you’re currently on Medicare, simply smile, close your web browser and thank God that you don’t have to worry about any of this! :)
* Note: since insurance rates are largely based on the number of people in a particular insurance pool, small pools often become very expensive. Old plans (such as grandfathered plans) often become very expensive because there is no incoming new business to help grow the pool. Additionally, people often leave old plans in favor of new ones. These factors can cause the size of the pool of old plan to shrink, thus increasing cost. Therefore, even on a grandfathered plan, you may find you can obtain more affordable coverage elsewhere.